International Aero Engines is a group of four aero-engine manufacturers, formed in 1983 to produce the engine. The companies and their responsibilities are:

Pratt & Whitney - Combustor and high pressure turbine

Rolls-Royce - high pressure compressor

Japanese Aero Engines Corporation - Fan and low pressure compressor

MTU Aero Engines - Low pressure turbine

FAA flight certification for the V2500 was granted in 1988.

The V2500 incorporates technologies developed by the partner company engines such as the Rolls-Royce RB211's hollow wide-chord fan blades and the Pratt & Whitney PW4000's "floatwall" combustor. Technology for the 10 stage high pressure compressor was derived from the Rolls-Royce RC34B research compressor programme, started in the 1960s.

The partners in the Japanese Aero Engines Corporation originally collaborated with Rolls-Royce in the late 1970s to develop the 20,000 lbf (89 kN) thrust RJ500 for commercial aviation's most successful platform, the Boeing 737-300, but the RJ500 programme was cancelled in the early 80's, after two engines had been rig tested.

In 1982, attention was focused on developing an engine in the 25,000 lbf (111 kN) thrust class for the 150 seater market. The engine was initially called the RJ500-35, but when Pratt & Whitney, MTU and FIAT joined the consortium some time afterwards the engine was renamed the V2500. V denotes the five original partners, whilst 2500 symbolizes the original thrust level of 25,000 lbf (111 kN). FIAT later withdrew from the consortium.

The V2500 is a more advanced engine than the RJ500. The fan is slightly larger in diameter. An additional zero-stage and 3 booster stages behind the fan raise the overall pressure ratio. Because of the higher bypass ratio, there are two extra LP turbine stages, making five in all.

More than 1,300 V2500 powered aircraft (July 2006 - IAE figures) have been delivered, accumulating more than 40 million flight hours. IAE's 135 customers include regional and large international carriers. In 2003 IAE's market share for the A320 soared to 83%, IAE has won a 56% market share since 1998 on this family. For comparison, the CFM56-5 series engines power approximately 1,600 A320 family aircraft (Oct 2006) currently in revenue service with 130 operators, and have accumulated 50 million flight hours and 30 million cycles. The Airbus designator for any aircraft equipped with IAE engines is "3"; eg. A319-132 or A321-231.